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Recent US Treasury proposal could move US captives offshore by Ted Hall, Director, Nevada Captive Insurance Association In October of this year the US Treasury, with support by the IRS, released its proposed regulation to eliminate federal income tax deductions for premiums paid to a related captive insurance company. The proposed regulation would allow affected entities deductions for claims and related expenses when the losses and expenses are actually paid by the captive. This would result in a significant acceleration of federal income taxes for US companies paying premiums to related captives. A number of groups are coalescing from within the captive industry and are constructing plans to protest the proposed regulation. At the November 6th meeting of the World Captive Forum in Scottsdale Arizona, Mr. P Bruce Wright, partner of law firm Dewey and LeBoeuf, warned that "the ruling may not be as attackable as we would hope". He further commented that there is a significant potential for the proposed regulation to drive a number of US domiciled captives offshore. Treasury proposal to receive additional consideration at the 4th Annual Conference of the Nevada Captive Insurance Association Mr. Wright will be accompanied by Mr. Tom Jones, partner
of the law firm of McDermott Will and Emery to provide further insights
as to the Treasury proposal at the annual conference of the Nevada Captive
Insurance Association to be held at Caesars Hotel and Casino in Las Vegas
on November 15th thru 17th. In addition, Mr. Dennis Harwick, President
of the Captive Insurance Companies Association will discuss the status
of his association's drive toward a political solution to the issue.
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